VASHDEO R BHOJWANI versus ABHYUDAYA CO-OPERATIVE BANK LTD & ANR. on 2 September 2019

1. In the facts of the present case, at the relevant time, a defaultof Rs. 6.7 Crores was found as against the respondent No.2. Therespondent No.2 had been declared a NPA by Abhyudaya Co-operativeBBank Limited on 23.12.1999. Ultimately, a Recovery Certificate dated24.12.2001 was issued for this amount. A Section 7 petition was filed bythe Respondent No.1 on 21.07.2017 before the NCLT claiming that thisamount together with interest, which kept ticking from 1998, was payableto the respondent as the loan granted to Respondent No.2 had originallyCbeen assigned, and, thanks to a merger with another Cooperative Bankin 2006, the respondent became a Financial Creditor to whom thesemoneys were owed. A petition under Section 7 was admitted on05.03.2018 by the NCLT, stating that as the default continued, no periodof limitation would attach and the petition would, therefore, have to beadmitted.D

2. An appeal filed to the NCLAT resulted in a dismissal on05.09.2018, stating that since the cause of action in the present casewas continuing no limitation period would attach. It was further held thatthe Recovery Certificate of 2001 plainly shows that there is a defaultand that there is no statable defence.E

3. Having heard learned Counsel for both parties, we are of theview that this is a case covered by our recent judgment in B.K.Educational Services Private Limited vs. Parag Gupta andAssociates, 2018 (14) Scale 482, para 27 of which reads as follows:- F“27. It is thus clear that since the Limitation Act is applicableto applications filed under Sections 7 and 9 of the Code fromthe inception of the Code, Article 137 of the Limitation Actgets attracted. “The right to sue”, therefore, accrues when adefault occurs. If the default has occurred over three yearsprior to the date of filing of the application, the applicationGwould be barred under Article 137 of the Limitation Act, saveand except in those cases where, in the facts of the case,Section 5 of the Limitation Act may be applied to condone thedelay in filing such application.”

4. In order to get out of the clutches of para 27, it is urged thatHSection 23 of the Limitation Act would apply as a result of which limitation

would be saved in the present case. This contention is effectivelyanswered by a judgment of three learned Judges of this Court inBalkrishna Savalram Pujari and Othersvs. Shree DnyaneshwarMaharaj Sansthan & Others, [1959] Supp. (2) S.C.R. 476. In thiscase, this Court held as follows:

“… …. In dealing with this argument it is necessary to bear inmind that s.23 refers not to a continuing right but to a continuingwrong. It is the very essence of a continuing wrong that it is anact which creates a continuing source of injury and rendersthe doer of the act responsible and liable for the continuanceof the said injury. If the wrongful act causes an injury which iscomplete, there is no continuing wrong even though the damageresulting from the act may continue. If, however, a wrongfulact is of such a character that the injury caused by it itselfcontinues then the act constitutes a continuing wrong. In thisconnection it is necessary to draw a distinction between theinjury caused by the wrongful act and what may be describedas the effect of the said injury. It is only in regard to acts whichcan be properly characterised as continuing wrongs that s.23can be invoked. Thus considered it is difficult to hold that thetrustees’ act in denying altogether the alleged rights of theGuravs as hereditary worshippers and in claiming and obtainingpossession from them by their suit in 1922 was a continuingwrong. The decree obtained by the trustees in the said litigationhad injured effectively and completely the appellants’ rightsthough the damage caused by the said decree subsequentlycontinued...” (at page 496)

Following this judgment, it is clear that when the RecoveryCertificate dated 24.12.2001 was issued, this Certificate injuredeffectively and completely the appellant’s rights as a result of whichlimitation would have begun ticking.

5. This being the case, and the claim in the present suit being timebarred, there is no debt that is due and payable in law. We allow theappeal and set aside the orders of the NCLT and NCLAT. There will beno order as to costs.

Appeal allowed.

A

B

C

D

E

F

G

H